S&P conference table (Photo: Allison Bell/ALM)

Several speakers have suggested here in New York this week, at S&P Global Ratings’ latest insurance conference, that excessive product complexity might be one reason that life insurers have had sales problems, and regulatory headaches.

Mark Mullin, the chief executive officer of Transamerica Corp., made that point today during a life insurance CEO discussion, in a response to a question about why annuities have taken such a whacking over the past 10 years.

Some of the products have been too complex, Mullin said.

“We want people to understand the options embedded in these products,” Mullin said.

(Related: New Life and Annuity Deals May Be Complicated)

Speakers also talked about the topic Wednesday, during a session on life insurance distribution.

Matt Carey, CEO of Blueprint Income, a company that sells annuities through the web, said product complexity limits the range of products Blueprint can offer. When the company tries to develop a simple, short explanation of one type of annuity, the explanation can easily end up being 15 pages long, he said.

Carey said the complexity of life insurers’ processes for reviewing applications and issuing products is another huge problem.

Many Blueprint customers say in the review that they loved the Blueprint sales process, until they began to purchase and pay for their annuities, Carey said.

Andrew McMahon, an executive vice president from Guardian Life Insurance Company of America, said the complexity of many life and annuity products makes likes difficult for the agents as well as for the consumers.

He gave the current fierce competition in indexed universal life performance illustrations as an example, and described that competition as “an arms race.”

“I think the industry in the long run is going to suffer for that,” McMahon.

James Quinn, chief financial officer of AmeriLife, a traditional life and annuity distribution company, said during the discussion that he believes any unnecessary bells and whistles come from the producers, and are not the result of anything the distributors are doing.

“It’s not the agents pushing complexity,” Quinn said.

But Quinn said in an interview after the session that he believes that life insurers should also continue to consider the needs of consumers who do have knowledgeable advisors.

In some cases, he said, products are complicated because life insurers need the complexity for their own protection, Quinn said.

“The complexity helps them manage their assets and liabilities,” Quinn said.

In other cases, he said, features that may look like unnecessary bells and whistles to consumers buying products on their own, through the web, may be helpful to an experienced agent who is trying to fine-tune an arrangement to meet a client’s specific needs.

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